Thursday, January 22, 2004

Bargaining for Freedom, by Nicholas D. Kristof

Kristof bought two Cambodian girls out of sex slavery. Sounds great, right? I thought so. Well, I hadn't thought of it this way (but Tyler Cowen did):

"As an economist of course I wondered whether buying slaves will lower net enslavement. I can think of at least two general mechanisms suggesting that Kristof's purchase will increase the number of slaves in the longer run, or at least not lower the number of slaves:

1. Slaveholders and brothel owners presumably hold profit-maximizing inventories. Depletion of inventory will lead to replacement under a variety of assumptions.

2. I suspect that Kristof, a Westerner, overpaid for the two slaves. Slave owners expect such higher prices in the future, which may lead to more slaveholding. Furthermore the cash flow may stimulate investment in more slaves. Even for firms in advanced economies, current cash flow predicts investment better than does real interest rates.

. . .

I would not advocate that Kristof resell his two women back into slavery, just to lower future prices. Nonetheless such economic considerations once again illustrate the gap between doing something to feel good about oneself, and actually achieving useful results."

I'd better check in with an economist before I do nice things anymore. I could really mess things up! Or I could just stop being nice. Tough call.